Correlation Between Fubon TWSE and Cathay Koreataiwan
Can any of the company-specific risk be diversified away by investing in both Fubon TWSE and Cathay Koreataiwan at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fubon TWSE and Cathay Koreataiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fubon TWSE Corporate and Cathay Koreataiwan IT, you can compare the effects of market volatilities on Fubon TWSE and Cathay Koreataiwan and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fubon TWSE with a short position of Cathay Koreataiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon TWSE and Cathay Koreataiwan.
Diversification Opportunities for Fubon TWSE and Cathay Koreataiwan
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fubon and Cathay is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fubon TWSE Corporate and Cathay Koreataiwan IT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Koreataiwan and Fubon TWSE is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fubon TWSE Corporate are associated (or correlated) with Cathay Koreataiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Koreataiwan has no effect on the direction of Fubon TWSE i.e., Fubon TWSE and Cathay Koreataiwan go up and down completely randomly.
Pair Corralation between Fubon TWSE and Cathay Koreataiwan
Assuming the 90 days trading horizon Fubon TWSE Corporate is expected to generate 0.84 times more return on investment than Cathay Koreataiwan. However, Fubon TWSE Corporate is 1.19 times less risky than Cathay Koreataiwan. It trades about 0.09 of its potential returns per unit of risk. Cathay Koreataiwan IT is currently generating about 0.04 per unit of risk. If you would invest 2,810 in Fubon TWSE Corporate on September 3, 2024 and sell it today you would earn a total of 1,514 from holding Fubon TWSE Corporate or generate 53.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon TWSE Corporate vs. Cathay Koreataiwan IT
Performance |
| Timeline |
| Fubon TWSE Corporate |
| Cathay Koreataiwan |
Fubon TWSE and Cathay Koreataiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon TWSE and Cathay Koreataiwan
The main advantage of trading using opposite Fubon TWSE and Cathay Koreataiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon TWSE position performs unexpectedly, Cathay Koreataiwan can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cathay Koreataiwan will offset losses from the drop in Cathay Koreataiwan's long position.| Fubon TWSE vs. Cathay Taiwan 5G | Fubon TWSE vs. Ruentex Development Co | Fubon TWSE vs. Symtek Automation Asia | Fubon TWSE vs. CTCI Corp |
| Cathay Koreataiwan vs. Cathay TIP TAIEX | Cathay Koreataiwan vs. Cathay Nasdaq AI | Cathay Koreataiwan vs. Cathay Dow Jones | Cathay Koreataiwan vs. Cathay Bloomberg Barclays |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |